Many are drawn to real estate professions for their high earning potential and the freedom to make their own schedules. If you’re considering a career change, you’ve probably wondered how much money real estate agents make and how they get paid.
Real estate agents work on commission, earning a percentage of the listing price they help their clients buy or sell. Keep reading to learn everything you need to know about starting your real estate career and what you can expect in your first few years as you build experience.
What’s the Average Real Estate Agent Salary?
There can be a lot of variability in how much real estate agents make because it’s a commission-based profession. Here’s the average salary in each state:
According to ZipRecruiter, the average real estate agent salary is $86,356. This ranges from $64,446 in Arkansas to $98,516 in Washington. However, many real estate agents are part-time professionals who earn less than these averages. Commission for real estate agents generally hovers between 5% and 6%, which is split between the listing and buyer's agents.
What Factors Affect How Much a Real Estate Agent Earns?
If you’re trying to figure out how to earn a living as a real estate agent, knowing what factors will affect your earning potential is important. Here are the top things to keep in mind:
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Number of homes sold vs. home price: To earn a living as a real estate agent, you must help your client sell or buy a home. Depending on the market in your location, you may want to focus on making more sales if homes are valued for less. Alternatively, you can make fewer sales if the homes you’re working with have higher listing prices.
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Marketing capabilities: As a new real estate agent, you’ll need to invest time and money in marketing yourself to make connections and find clients.
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Experience: Building a trusted reputation as a real estate agent can take time — you typically make more money with more experience.
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Brokerage fees: Real estate agents must work with a brokerage firm and split their commission. A brokerage firm typically takes around 40% of the commission.
How Much Do Real Estate Agents Make Their First Year?
For most agents, the first year in real estate will almost always be the most difficult. You’re still building experience and your reputation, so it can be challenging to find clients. The home buying and selling process can also take a couple of months.
Real estate agents in their first year can expect to go nine months or more without making anything. It’s a good idea to build up some savings or have a second income stream until you can earn enough to support yourself on your real estate experience alone.
One of the best ways to get started in real estate is to join a team or brokerage that can provide you with an influx of leads that will lead to closings and help you build more experience. Joining a team with a positive reputation can also help you build trust within the community and generate more leads.
When I moved to Raleigh from Boston and became a Realtor, I knew no one in the local area and nothing about how much money to expect to make in my first year. In my first year as a real estate agent, I closed three transactions and made $14,372.13 after paying my broker their split of my commissions.
It is nearly impossible for anyone who has tried to live on $14,372.13, especially when you're spending money to market your real estate business.
Fast forward to my second year, I closed 16 homes. A year later, my brokerage closed over 50 homes. Now my real estate brokerage makes the money and I pay myself a salary.
Do Real Estate Agents Make Money by the Hour?
Real estate agents do not make money by the hour; they profit off commission from the houses they sell.
However, there’s a direct correlation between how many hours you work and how much money you make. Investing time and energy into marketing yourself, networking, and giving your clients the best experience possible will translate into more success.
If you want to make a living wage from being a real estate agent, you’ll probably need to pursue real estate full-time rather than part-time.
How Much Do Real Estate Agents Make Per House?
Every house a real estate agent makes money on will have a different commission structure and percentage. Factors such as location and whether or not there’s an agent bonus also affect how much you earn per home.
Here’s what a typical breakdown might look like:
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A listing real estate agent charges 6% to sell a house, splitting the commission with the buyer's real estate agent.
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Both real estate agents’ 3% commission is paid to their respective brokerage.
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The brokerage writes their real estate agent a check, typically taking around 40% of their commission based on the agreement between the brokerage and the agent.
In my early days as a Realtor, my real estate brokerage took 36% of each commission check. That was too much of my hard-earned money, considering they weren’t adding much value, such as bringing me leads or helping support closings. So I made a change and I joined a brokerage that charged me a flat $399 per transaction instead before opening my brokerage, Raleigh Realty.
How Do Real Estate Agents Get Paid?
Real estate agents either represent the seller, the buyer, or both in a real estate transaction. The amount the agent will be paid depends on the commission agreed upon between the agent, seller, buyer, and real estate brokerage.
As we discussed above, both real estate agents’ commissions go to their brokerage, which then pays the agent for the sale.
When you join a real estate brokerage, they will have specific guidelines on how you will be compensated for every home you sell. Each agent makes a different amount of money on each home they sell based on the sales price, the commission split, the brokerage split, and any expenses they may have incurred while selling the home.
What Kinds of Expenses Do Real Estate Agents Have?
Many people underestimate the expenses and overhead real estate agents have. Becoming a real estate agent can take a large investment upfront. At a typical office job, your employer usually provides some resources for you. As a real estate agent, you need to find those resources yourself. Here are some expenses you should consider as a real estate agent:
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Office space
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Health insurance
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Office Supplies
You’re also likely to incur more transportation-related costs, such as gas or car repairs, as there can be a lot of driving to meet clients and view homes.
One of the biggest expenses most people don't realize when beginning their career as a real estate agent is that it costs money to be a Realtor. You will have to pay for your:
Real estate education
These expenses are ongoing and add up to thousands of dollars pretty quickly.
The largest expense at Raleigh Realty is our technology, our number one form of marketing. We have spent more than $30,000 on our website and over $10,000 on online marketing. Our website is our top form of lead generation, so it only makes sense that we spend the bulk of our earnings on growing and improving our real estate website for folks searching for homes for sale in Raleigh!
FAQ
How much do most real estate agents make in a year?
The average real estate agent salary is $86,356 in 2023.
How can you make $100,000 in your first year in real estate?
Expecting to make $100,000 in your first year as a real estate agent is unrealistic. Building your skills and connections takes time to make a high salary. Though many real estate agents are compensated well, we recommend you have a secondary income for your first year until you can make enough from commission.
What percentage do Realtors get?
Around 6% of a home's listing price typically goes to the Realtors or agents involved. However, it's split between the buyer’s agent, the listing agent, and their brokerages.
How much does a Realtor make on a $100,000 sale?
Each sale agreement has a different commission for real estate agents, and each real estate agent has a different contract with their brokerage on how much they’re paid. If agents got a 6% commission from a sale, their brokerage took 40%, they’d make $3,600 from a $100,000 home sale.
Starting Your Career in Real Estate
Don't let these numbers deter you from a career as a real estate agent. Hard work pays off, so if you’re ready to invest your time, you can find success.
Here are some of my recommendations if you’re thinking about becoming a Realtor:
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Join a well-established team: Connections are everything in real estate. A respected team can help you build a positive reputation, and you’ll have successful colleagues to learn from.
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Start in new construction sales: The inventory for new construction homes can be more reliable, and these homes may earn you a larger commission.
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Start part-time: The real estate sales cycle is long — working part-time might slow your growth, but if you’re struggling with bills, it can ensure you can stay in business long enough to see real returns.
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Become a subagent: Subagents work with listing agents to help bring in buyers for a seller. This can help you build more experience.
Becoming a real estate agent can seem daunting, especially for the first year. However, you can launch a satisfying and profitable career with our tips and knowledge about how real estate agents make money.
Real Estate Agent Commissions in 2025:
The Evolving Landscape of Agent Compensation
As we navigate through 2025, the commission structures for real estate agents have undergone significant changes. Understanding these new dynamics is crucial for new and experienced agents looking to maximize their earning potential in today's market.
Traditional Commission Structures: Still Relevant?
While the standard 5-6% commission split between listing and buyer's agents remains the foundation, several variations have emerged. In today's market, the average commission has adjusted slightly downward to 4.5-5.5% in most markets, with high-value properties often commanding lower percentage rates but higher dollar amounts.
Buyer Agent Compensation Changes
One of the most significant shifts in 2025 has been the restructuring of buyer agent compensation. Following industry-wide settlements and new regulations, many markets now require:
- Separate written agreements with buyers explicitly outlining compensation
- Clear disclosure of how buyer agents are paid
- Options for buyers to negotiate agent compensation directly
At Raleigh Realty, we've adapted by implementing transparent buyer consultation agreements that clearly outline the value we provide and how our services are compensated.
Fee-for-Service Models Gaining Traction
We're seeing increased adoption of alternative compensation models:
- Flat-fee services for specific aspects of transactions
- Hourly consulting rates for buyers who want guidance without full representation
- Tiered service packages with corresponding fee structures
These models allow clients to choose exactly what services they need and provide agents with more predictable income streams.
Brokerage Split Evolution
The traditional broker-agent split has also evolved:
Increased Favorability for Productive Agents
Many brokerages, including large national firms, have implemented more aggressive splits favoring productive agents. Top performers may now receive 80-90% of commissions compared to the traditional 60-70%.
Monthly Fee Models
Some brokerages have moved to a model where agents pay a set monthly fee plus a small per-transaction fee, then keep 100% of their commissions. This model works particularly well for consistent producers.
Hybrid Models
At Raleigh Realty, we've implemented a hybrid approach that combines a reasonable split with value-added services that actually help our agents earn more, rather than just taking a percentage.
Technology's Impact on Commission Structures
Technology continues to reshape how agents earn:
Referral Fee Automation
Digital platforms now efficiently connect agents with relocating clients, typically charging 25-35% of the commission. These platforms have become more sophisticated in 2025, using AI to match clients with the right agents better.
Transaction Management Efficiencies
Automated transaction management systems have reduced the administrative burden, allowing agents to handle more transactions and potentially adjust their fees based on the services' complexity.
Negotiation: The New Normal
Commission negotiation has become increasingly common:
Value-Based Discussions
Successful agents in 2025 frame commission conversations around value provided rather than defending a specific percentage. At Raleigh Realty, we train our agents to articulate their unique value proposition clearly.
Competitive Differentiation
Some agents are choosing to compete on service rather than price, offering premium marketing packages, staging services, or other enhancements to justify their commission rates.
Rebate Programs and Incentives
Various rebate structures have gained popularity:
Buyer Rebates
Some agents offer to rebate a portion of their commission to buyers, particularly in competitive markets where this can help win client business.
Seller Incentives
Tiered commission structures based on sale price or days on market have become more common, aligning agent incentives with seller goals.
Legal and Regulatory Considerations
The legal landscape continues to evolve:
Transparency Requirements
New regulations in many states require greater transparency in how commissions are structured and disclosed to consumers. This includes clear documentation of all fees and how they're divided.
Commission Lawsuits Impact
Recent legal settlements have reshaped how commissions are presented to consumers, emphasizing the value provided for the fee charged.
Building a Sustainable Commission-Based Business
For agents looking to thrive in this new commission landscape:
Diversification of Income Streams
The most successful agents no longer rely solely on traditional commissions. Many supplements with property management, referral fees, or consulting services.
Client Volume vs. Commission Rate
Some agents are focusing on increasing client volume rather than maintaining higher commission rates, leveraging technology to serve more clients efficiently.
Specialization Premium
Agents with specialized expertise in luxury properties, investment real estate, or particular neighborhoods are often able to command higher commissions based on their specific knowledge.
Future Trends to Watch
As we look ahead:
Subscription Models
Some innovative brokerages are testing subscription-based models where clients pay a monthly fee for ongoing real estate services, not just during transactions.
Performance-Based Components
Commission structures with performance metrics such as sale price relative to listing price or days on market are gaining traction.
Consumer-Driven Options
Increasingly informed consumers demand more flexibility in compensating real estate professionals, driving further innovation in fee structures.
The Bottom Line for Real Estate Agent Commissions
Despite the changes in commission structures, the opportunity for significant income remains strong for agents who adapt. At Raleigh Realty, our agents who have embraced these new models have seen their income increase by an average of 22% over the past year.
Understanding the evolving commission landscape is critical for anyone looking to succeed in real estate in 2025. By staying informed about these trends and positioning yourself to provide exceptional value, you can build a thriving real estate business regardless of how commission structures continue to evolve.
Remember that regardless of commission structure, the key to success remains providing outstanding service to your clients. Happy clients lead to referrals, which remain the most cost-effective way to build a sustainable real estate business.